During the late US session, Ethereum pumps 16% amid an interest rate hike from the US Federal Reserve. Ethereum’s early-day downward rally has been halted, gaining some modest bullish traction near $1,589.81. However, the reason could be related to the recent modest gains in the cryptocurrency market.
The price recovery of Bitcoin, the world’s largest cryptocurrency, demonstrates this. As we all know, July has been challenging for Ethereum with the price of ETH fluctuating between $1,040 and $1,640. Price changes of more than 58% for major coins like Bitcoin and Ethereum are unusual. However, the recent drop in cryptocurrency market has raised some concerns.
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Market Sentiment Around Ethereum
The Ethereum network is currently sending conflicting signals. This has made it difficult for traders to forecast the price of ETH. Ethereum has long been viewed negatively by institutional investors. They were initially interested in the second-largest cryptocurrency by market cap. However, it did not perform as well as expected, resulting in significant outflows. Although Ethereum has begun to see inflows, sentiment among these major investors appears to improve.
Ethereum’s current price is $1,591, with a 24-hour trading volume of $22 billion. Ethereum has increased by 15.79% in 24 hours. With a live market cap of $177 billion, Ethereum is now ranked second in the market.
Mixed Crypto Market Eyes On FOMC
The cryptocurrency market has lost its upward momentum from the previous week. A new crash could occur due to investors returning to the fiat market and lacking bullish leverage in the cryptocurrency market. The fact that Bitcoin has been losing ground could be detrimental to other cryptocurrencies. However, Ethereum’s price was harmed by poor cryptocurrency performance and a negative BTC performance.
Bitcoin is much more cautious as the Federal Reserve prepares to raise benchmark interest rates to combat inflation. Many expected the pair to break out of its previous trading range and move higher. Still, as the week begins, the Fed’s influence is becoming more apparent, adding to the already precarious risk asset picture. As a result, the overall crypto market has been sending mixed signals, which has been cited as one of the primary reasons for falling crypto prices.
FOMC and Fed Fund Rate Decision
The US dollar has been flashing red since the beginning of the week as traders prepare for a significant Federal Reserve policy announcement later in the day. The Federal Reserve was expected to raise interest rates by 75 basis points in order to combat rising inflation. .
On Wednesday afternoon, the Federal Reserve concluded its two-day meeting. Fed Chair Jerome Powell announced another 0.75 percentage point boost as policymakers seek to calm decades of rising inflation. Following Powell’s remarks, stocks rose.
Traders believe the Fed will raise interest rates to as much as 3.4 percent by the end of the year to help get inflation back on track. As a result, the prospect of massive rate hikes pushed the dollar index to its highest level in nearly 20 years earlier this month, at 109.29, which may have a negative impact on cryptocurrency.
Buy the Rumor Sell the News – Ethereum Pumps 16%
For the time being, the ETH/USD pair is rising as the dollar appears to be weakening due to buy the rumors, sell the fact reasoning. The decision to raise interest rates was already priced in, so investors are now selling dollars to lock in a profit. This eventually drives the ETH/USD uptrend.
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Source: https://insidebitcoins.com/news/ethereum-pumps-16-amid-us-federal-funds-rate-hike